I have tried to build a tax system that tries to spread development. The system also makes it easy to collect taxes and administer them.
But before we discuss that let’s first see what are the problems we are facing with our current tax system.
the inefficiency of the current tax system
The current tax system faces high corruption, bribing officers to hide taxes.
it is hard to administer because one has to keep track of different codes and exemptions. Auditing of accounts and tracking transactions take time and resources.
Businesses face high compliance costs as they have to file for different exceptions, keep records of transactions, etc.
one may say that businesses keep such for future analysis. But this is not true of small businesses. Many small businesses don’t have the time and resources to maintain this data.
Upcoming problem for tax authority
With the advancement in cryptocurrency and the spreading of the internet, the tax authority is going to face challenges in getting people to pay taxes.
Cryptocurrency will allow anonymous trading which gets hard to track and tax. With time we will see a shift towards this new payment method.
Land tax based on population percentage
how does this LTBPP works?
You first set the annual budget or tax revenue that you are looking to generate. First, we need a budget target, the second step is to find what percentage of the population lives in different areas.
The amount of tax that gets collected from an area will depend upon the percentage of the population living in that area.
Lets understand it with example.
let’s say 2% of the total population is living in an area this will mean 2% of the target budget will be collected from this area.
let’s say 2% of the budget comes out to be 1 billion and the city has an area of 1000 km² which is 1000000000 m².
This gives us 1000000000 to be collected ÷ 1000000000 m² = 1$ per m².
The numbers may vary with areas and their population. The high share of the total population in an area will have a high price/m².
Benefits of LTBPP
LTBPP does not suffer from many problems that other tax systems suffer from.
Administration of LTBPP
LTBPP is easy to administer as one can’t just pick up the land and take it to the foreign tax shells companies.
We can use GPS coordinates to mark one’s property. Space satellites can be used to check if someone is encroaching land.
the land which is owned Illegally can be detected easily.
Cost of administration and compliance
We normally use satellites to do regular surveys of land area. The same tech can allow checking for land encroachment and illegal ownership of land can be detected easily.
Businesses and individuals just have to multiply their owned land size with per m² price and pay the tax.
This system doesn’t require keeping track of old receipts or sales or capital gain tax or exemptions. The whole tax code can be a few pages.
Spreading of Development
LTBPP pushes economy to spread it’s development as too high concentration of poeple increase the price/m² in that area.
Businesses, factories, industries will get an incentive to move to areas with low population percentage. This will spread the high load cities put on the environment.
The idea is not to make cities vanish. highly-dense populated Cities can keep on existing if industries or businesses in a city can provide enough income to sustain living.
We want efficient cities, not polluted areas full of traffic and in which people are living like rats.
Cities cant grow exponentially in size there is a limit to their size. After a size, they start to become less efficient.